Lloyds faces shareholder backlash on board pay

Saturday 30 May 2009 19.01 EDT
First published on Saturday 30 May 2009 19.01 EDT

Lloyds Banking Group is on a collision course with its shareholders over awards of shares for its top management team and the performance criteria attached to them.

City investors are considering voting against the remuneration report, or deliberately abstaining to register a protest about the pay plans, at the group's annual meeting in Glasgow on Friday.

UK Financial Investments, which looks after the taxpayer's 43% stake in Lloyds, has yet to decide how to vote at the first annual meeting of the group, formed when Lloyds TSB rescued HBOS. The Association of British Insurers, whose members control around 15% of the stock market, has issued an "amber top" alert ahead of the meeting. The alert - less severe than a "red top" warning, the organisation's highest - warns of possible issues for concern by members.

Under a new incentive scheme, shares are to be awarded to chief executive Eric Daniels and other team members of the executive team, including Helen Weir and Truett Tate.

Daniels can receive 200% of his salary in shares - less than he had been entitled to receive previously - in 2009. A new pay system requires him to reach goals based on financial targets of earnings per share and economic profit targets as well as some non-financial targets. Some investors are thought to have concerns about the non-financial goals.

Lloyds said: "We have consulted extensively with our major shareholders about our remuneration arrangements. We believe they are fair and proportionate and reward our executive team for exceptional performance which will be in the interests of shareholders."